many-ai-startups-across-europe-don't-use-artificial-intelligence

Many So-Called AI Startups Across Europe Don’t Actually Use Artificial Intelligence

As artificial intelligence keeps getting better, more and more startup companies are now trying to incorporate this exciting technology in order to increase efficiency. Or at least, that seems to be what’s happening. According to a new report, however, a lot of AI startups across Europe are simply cashing in on the hype and don’t actually use artificial intelligence in any meaningful way as part of their business. This startling revelation comes courtesy of MMC, a UK-based venture capital firm that has recently released a new report on the state of AI in 2019.

According to the report, there are currently some 2,830 companies across Europe that are classified as AI startups. A pretty impressive number. Unfortunately, only around 1,580 of those companies (60%) actually make use of artificial intelligence. Meanwhile, the other 40% of so-called AI startups in Europe seem to have been wrongly labeled for various reasons.

“We looked at every company, their materials, their product, the website, and product documents,” says MMC head researcher David Kelnar. “In 40% of cases we could find no mention of evidence of AI.” He also added that in these cases, “companies that people assume and think are AI companies are probably not.”

Most of These Companies are Not Marketing Themselves as AI Startups

The report also found that a lot of the companies that are classified
as AI startups haven’t actually labeled themselves as such. Rather, third-party
analytics websites like Pitchbook and Crunchbase are the ones doing the
classification and many of the companies that have been wrongly labeled simply
didn’t bother to correct them. Kelnar believes most of these companies are well aware of the situation but aren’t doing anything about it because being seen as
an AI startup has a number of advantages.

The MMC report indicates that companies working with artificial intelligence routinely raise anywhere between 15 and 50% more funding from investors compared to other tech startups. Therefore, it makes complete sense from a business perspective to just go with the flow when someone classifies your company as an AI startup. As Kelnar puts it, “there is little incentive to correct a listing, since it spells potentially-less investment down the line and it can pay to brand yourself as being an AI company.”

The Number of Genuine AI Startups is Constantly Growing

Misleading listings aside, MMC’s researchers also included
some very interesting stats related to companies that actually do use
artificial intelligence as part of their business. According to the report, the
number of AI startups grew from 1 in 50 to 1 in 12 in just the last six years. The
researchers also revealed that one year ago only about 4% of all major companies
were using artificial intelligence technology in some form or another. That
percentage is now already at a whopping 12% and constantly growing.

Jason Moth